Buyer Agrees to Pay Above APPRAISAL Price - Will FHA allow?

[Ibrahim Hughes]

Greetings everyone. I have a property I'm selling where the buyer has agreed to pay $25k above what it was last appraised for 2 mos. ago when another buyer was purchasing using a conventional loan. That buyer initially decided not to pursue the deal but has since changed his tune. However, he's too late and is now the backup buyer.

But I want to make sure my FHA buyer won't have any issues with HUD in agreeing to pay $25k more than the appraised price with the understanding that HUD will only loan against the appraised amount and nothing more. Comments by anyone in the know?

BTW, long story but the appraisal came in low because the appraiser didn't know historical homes or historical neighborhoods (which this home is and is in, respectively). Property came in about $50k BELOW asking price although we've had plenty of buyers agreeing to pay asking price and above. Go figure.